200. All our questions are very good.
(Mr Findlay) Some are more excellent than others.

Mr Donohoe

201. You are not getting any money.
(Mr Findlay) I think the thing is you have to consider
what is going to happen in the future because if there is an upturnthis
is one of our fearswe will not have the capacity to deal
with that upturn, certainly if we do not start spending money
now on the system. That is why we fear this traumatic downturn.
Okay it has happened but we have got to train people, we have
got to be there ready because airlines can much more easily pick
up and go again with pilots, etc., and planes that have just been
stacked in the desert, you cannot actually mothball a radar system,
it still has to work whether you have got one planeif you
had only one plane it would be easy, you would not need oneif
you have got 200 planes or 2,000 planes you still have to keep
that going and replace it.
(Mr Morris) Can I give a supplementary answer to that,
Chairman. One of the problems we are finding at the moment is
though the traffic levels on the Atlantic have fallen and the
large capacity aircraft have fallen off, a lot of these have been
replaced by smaller capacity aircraft, and actually the workload
in National Air Traffic Services amongst the air traffic control
system has not changed, it has changed very little. I think November
is probably the biggest change month on month. I have suddenly
realised from earlier evidence why that may have been, because
that coincided with the problems with the railways, and it will
be interesting to watch the trend on that.

Chairman

202. Do not worry, Virgin Railways are recruiting
for shuttle services.
(Mr Morris) We are getting reports back from all the
centres and the airports that the peaks are there. What has happened
is one refers to the shoulders of the day, the earlier and the
later, where a lot of capacity that has been delayed to later
on in the day is not there. The peaks are still there and the
heavy traffic levels are still there. Because there was always
a shortage of capacity at the peak times, there is always demand
waiting to fly into the slots.

Mr Stevenson

203. Does that indicate that NATS get a larger
income from the high capacity aircraft than you do the smaller
ones?
(Mr Morris) Absolutely.

204. So there is a discriminatory charging regime
as far as you are concerned and yet the airports have told us
that they have a standard charging regime. Why the difference?
(Mr Morris) If you look at the type of traffic on
which we earn the income, the majority of the traffic which flies
transatlantic is 757 and larger, most of them 767 and larger.
Most of them will travel the full length of the United Kingdom
and then go into the ocean.

Mr Donohoe: Not literally.

Mr Stevenson

205. Would you like to rephrase that?
(Mr Morris) It depends on distance.

Chairman: Go over the ocean.

Mr Stevenson

206. I just want to clarify that NATS gets less
income from smaller aircraft than from larger aircraft and that
is discriminatory.
(Mr Morris) Absolutely.

Chairman: You have a sliding scale.

Miss McIntosh

207. Is there any evidence at all that bags
are still travelling unaccompanied by passengers? This relates
to supplementary evidence from the TGWU, so I regret Mr Morris
is not here. Is there any evidence that bags are travelling without
their passengers?
(Mr McGurk) We get regular security briefings and
we have not had any evidence that that is happening. That is not
to say that the T&G do not have specific evidence. That could
be addressed to them.

Miss McIntosh: Perhaps we could ask for a supplementary
note.

Chairman

208. We are going to ask the Transport and General
Workers' Union to come back. You will forgive us if they come
back without you.
(Mr McGurk) Definitely.

Miss McIntosh

209. Are there any reasons to take hand luggage
and put it all in the hold? Would there be any advantage to that?
Would you advocate body checks?
(Mr McGurk) I think I would leave specific security
issues to one side, not because I am trying to be secretive but
because it is an area of expertise which we did make clear in
our submission that we would not address, detailed security operational
issues.

Chairman: That is entirely your privilege, please
do not feel under any obligation.

Miss McIntosh

210. Of the job losses that have been announced
is there any evidence at all that it is easier to sack people
based in Britain than in continental Europe?
(Mr McGurk) Yes.

211. Even after the reforms of the Government?
(Mr Kline) One of the issues that has come up in one
charter company we have dealt with is the issue of whether under
the 1995 Regulations, without becoming too technical, it is appropriate
to divide an airline up into a number of different bases in order
to hit a 30 day consultation period rather than a 90 day consultation
period. It did not come to court because the threat of court action,
in our view, meant that consultation was appropriate. We reduced
the number of job losses in that company from 77 to 24. There
is an issue there that that tactic having been tried in one company
was attempted in one other major company that sought redundancies
and it was knocked back. Industrial relations in some of the airlines
is excellent, others perhaps are still on a slight learning curve.

212. Can I ask a couple of questions of Prospect.
One is in your memorandum at paragraph 13 you state that "Capital
investment in vital infrastructure projects such as the New Scottish
Centre and the Radar Replacement Programme have been postponed."
That presumably is not in relation to anything that happened on
September 11?
(Mr Findlay) I think it is in relation to the combined
effect of the less traffic before 11 September and the big drop
in transatlantic traffic after 11 September. I think it is a combined
effect. Because the airline group actually had to borrow every
penny that they put in or gave to the Government for it they are
facing a huge debt mountain and they can no longer see the way
forward to going through this part of the capital investment at
this point in time. They are looking to see whether the money
will come in but the cash flow is not as good as had been predicted.

213. At paragraph 18 you say: "There are
proposals for significant cutbacks well in excess of previous
NATS proposals, not only in personnel but also in Service Level
Agreements" and you talk about the direct correlation to
the number of engineering staff required. Are you able to say
more about what the impact of that will be?
(Mr Findlay) The Service Level Agreements are the
restoration times in the main if a radar goes down or a screen
goes, when that will be replaced. That is a very important feature
obviously in safety. What we have seen is they are looking to
extend these times. We are fighting this at the moment. The other
effect of not actually putting more money in investment for new
equipment is that you need more engineers to look after it because
it is ageing and it needs more maintenance, it needs a lot of
people who know the system.

Chairman

214. As we know from Heathrow, I think?
(Mr Findlay) Yes. This is one of the big issues that
we are finding. This Service Level Agreement incidentally has
not yet gone through all the safety measures that it will need
to go through. That is something we are very, very aware of and
very fearful of.

Miss McIntosh

215. Changes in airline ownership rules, how
would that affect members of the two bodies?
(Mr Findlay) In our case it would depend on those
changes and how they affected the group that currently own National
Air Traffic Services. Part of the reasoning in the past was that
the privatisation would actually give us some capital to finance
and would be safe out of the clutches of the Treasury but that,
of course, has not quite happened. What might well change is if
there were more airlines or a different set of airlines looking
after NATS we may well have consequences on the charging procedure
because all airlines want to fly in air traffic regions and it
should be free according to them, they do not want to be charged
anything. Therefore, they do not want the charges put up. The
effect is NATS cannot put the charges up because the airlines
do not want it to happen either. It is a little circle.

Chairman

216. Thank you. Mr McGurk, what effect will
it have on your staff?
(Mr McGurk) I think the UK is more likely to be a
prospective beneficiary of takeovers rather than a target. The
European rules are going to change and we are relatively agnostic
about them. We do not openly call for them to be abolished but
we do not see really see that they are going to remain in the
long term.

Miss McIntosh

217. My understanding is that $5 billion has
been paid by the US Government to US airlines. Do you have any
idea if some of that money has made its way to the 100,000 staff
who have been laid off by US carriers?
(Mr McGurk) We have got lots of evidence from our
US colleagues in the Airline Pilots' Association and from other
US unions representing general workers like the Teamsters and
the IEM that very little of that money has found its way into
preserving jobs. This is one of the issues that will have to be
addressed. There is a huge lobbying effort from the airlines to
the Air Transport Association in Congress and they have managed
to get their revenues, their security, underwrit10 as a federal
responsibility. The wider point I have to make is that presents
a very unlevel playing field for us in the compensation that our
Government has contemplated purely by comparison proportionately.

Mr Stevenson

218. Are you aware that the Airline Group have
asked the Government for £300 million to meet their anticipated
revenue shortfall?
(Mr Morris) We have read the newspaper reports that
they have. They have not confirmed to us that they have asked
for it but it would be very sensible to ask and that would make
it a true partnership as we wanted it in the first place.

219. So, if you are not aware other than the
press reports, presumably you are not aware of the what effect
on your part of the industry it would have if that £300 million
were not agreed?
(Mr Morris) If that £300 million were not agreed
we know in the base case that NATS are working to that they will
be £170 million short in the next two years.